TaxTMI 
TaxTMI 
2018 (9) TMI 545
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....labour job Contribute 95% to 98 of Contract Value and 2-3% as Oil and Lubricant and pertains to consumable Purchase to operate the Existing Plant. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act/ MGST Act would be mentioned as being under the "GST Act". FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- 1. Appellant Company is a registered Civil Contractor, carrying out the business of a. Construction, erection, commissioning of Sewerage treatment plant. b. Operation & Maintenance of Sewerage Treatment and Disposal Plants. as per the Work awarded by various Municipal Corporations / Councils/ Local Authority. 2. During the FY 2016-17 appellant had made the Total Contract Receipts amounting to Rs. 200....
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....hority have rejected the claims made by appellant. As per discussion with NMMC all such contract related to Operation and Maintenance of STP Plant comes under Rule 243 W and Not Applicable for GST. The service of Operation and Maintenance of STP Plant related to Public Interest and no GST is applicable for all such Job. As per Annexure - 17. Similar to the above Operation & Maintenance work order for STP's we have work Order for below sites b. Comprehensive Contract for Operation Maintenance of Sewerage Treatment and Disposal Plant at Site Vashi STP Agreement dated 30.11.2017 against Letter of Acceptance vide Ref. No. NNMC/CE/1408 dated 27.11.2017 for Tender vide Ref. No. B-2/ ACE/10(02)/2015-16. As per Annexure -10. c. Comprehensive Contract for Operation Maintenance of Sewerage Treatment and Disposal Plant at Site Airoli STP Agreement dated 12.12.2017 against Letter of Acceptance vide Ref. No. NMMC/CE/1534/2017 dated 1212.2017 for Tender vide Ref. No. B-2/ACE/10(03)/2015-16. As per Annexure - 11. d. Comprehensive Contract for Operation & Maintenance of Sewerage Treatment and Disposal Plant at Site CBD Belapur STP Agreement dated 19.12.2017 against Letter of Accept....
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..... 95%) of Sewerage Treatment Disposal Plant and balance 5% consumables are Adhesives, Oil & Lubricants. The Appellate had prepared and submitted the financials bid for the Operation & Maintenance work order considering the old Indirect Tax Laws wherein, Service Tax & VAT was exempt as per Notification no-25/2012 dated entry no. 12. 4. As per the Earlier Indirect Tax Laws i.e. Service Tax (Finance Act,1994) the Operation & Maintenance Service of Sewerage Treatment and Disposal Plant was exempt Under Notification no.25/2012 dated entry no. 12 as per Annexure-3. 5. As per the Goods & Service Tax Act, 2017 notification no. 11/2017 dated 28.06.2017 and notification no. 20/2017 dated 22.08.2017 read as below; complete notification as per Annexure - 4 & Annexure-5. 6. As per the notification no. 12/2017 of GST Act, 2017 dated 28.06.2017 exempt list of services issued by GST Council read as below; complete notification as per Annexure - 6 and Article list under 243W of the constitution of India is as per Annexure - 7. 7. For the betterment development of Town, City & Villages and in Public Interest we feel that all such Contracts related to Operation & Maintenance of STP Pla....
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....s the claim of the Municipal authorities that the services under reference are covered by Article 243W of the Constitution and hence exempt from GST does not appear to be correct. As per Not No. 12/2017-Central Tax (Rate) dated with effect from 01.07.2017, pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Govt, State Govt or Union Territory or local Authority or a Governmental Authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243 W of the Constitution or in relation to any function entrusted to a Municipality under Article 243VV of the Constitution are exempt from tax. It can be seen from the submission of the applicant that they use some consumables such as oil, lubricant etc. As such their services cannot be termed as pure services attracting under Not No. 12/2017 and the applicant will have to pay the GST on the services provided by them. However, their services have been exempted from GST vide Notification No. 2/2018- Central Tax (Rate), dated 25.01.2018 which reads as below; "Composite supply of goods and services in which the value ofsupply of ....
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.... Operation and Maintenance contracts/ work orders entered into by them with Navi Mumbai Municipal (NMMC), Panvel Municipal Corporation (PMG), Municipal Council, Pandharpur (MCP) and City & Industrial Development Corporation of Maharashtra, Ltd. (CIDCO). The other issue raised before us is weather the Applicant is entitled to Input Credit Tax (ITC), of purchases against such work order and whether it is the responsibility of municipal authority to discharge such GST Liability payable to the Applicant. The Applicant has submitted that their Company is a registered Civil Contractor, carrying out the business of Construction, erection, commissioning of sewerage treatment plant and Operation & Maintenance of Sewerage Treatment and Disposal Plants work, which is awarded to them by the various Municipal Corporations/Councils/ Local Authority, as mentioned above. For the year under consideration FY 2017-18 they have been awarded work order of Operation & Maintenance contract by various Municipal Corporations, details of which have been submitted by them. As per their submissions the Operation & Maintenance Service of Sewerage Treatment and Disposal Plant was exempt from service tax unde....
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....no. 232 and page no. 313, respectively. Here they have submitted that as per the said work order, the major portion of work is labor oriented i.e. 98% and balance 2% consumables. In this case too they have stated that, on the implementation of GST, 2017 the said Operation & Maintenance work was taxed as per notification no. 11/2017 dated 28.06.2017 and notification no. 20/2017 dated 22.08.2017 and NMMC has disregarded levying of GST on the said work saying it is exempt under section Rule 243 (W) mentioned above. The third work order cited by them pertains to work order received from CIDCO for Operation & Maintenance of Sewerage Treatment and Disposal Plant at Site Ulwe STP against Letter of Acceptance vide Ref. No. CIDCO/CF/(NM) /2014 /243 dated 25.07.2014 for Tender vide Ref. No. 02 /CIDCO/SE(ULWE)/EE(UL-II)/2013-14 detailing terms of work for Operation & Maintenance. Here also they have submitted that as per this work order of Operation & Maintenance of Sewerage Treatment and Disposal Plant, the major portion of work is labor oriented i.e. 95% and balance 5% consists of consumables I.e. Adhesives, Oil & Lubricants. The department has contended that it can be seen from the s....
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....ASKETS,PUMP IMPELLERS, ETC, by the operator is stated. As per Para 16.2 :- For the work of extension/modification to the sewerage network, improvement to civil structures, etc., the NMMC shall reimburse on the prevailing schedule of rates or the actual cost of procurement by the operator, whichever is lower. NMMC reserves the right to either procure those items of stores or fix a rate contract against which the operator can procure such stores. • As per Para 20.2, the operator shall procure all spare parts required for the maintenance of the equipment, excluding those supplied by the NMMC. • As per Para 20.5, the operator shall provide adequate engineering equipment, inventories. PLANT AND MACHINERY and all other things, WHETHER OF A TEMPORARY OR PERMANENT NATURE, required for carrying out the operations under the contract. • As per Para 25.3, 'For non-replacement Of damaged and missing manhole covers or frames there would be a penalty levied (this implies that the operator i,e, the applicant is also responsible for replacement of manhole covers. • As per Para 27.1, 'THE CONTRACE PRICE SHALL COVER..... SPARES AND CONSUMABL....
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....n accordance with the standards specified in the contract. • As per Para 8.1, THE CONTRACTOR SHALL PROVIDE ALL SUPERINTENDENCE, LABOUR, MATERIALS, PLANT, CONTRACTOR'S EQUIPMENTS AND ALL OTHER THINGS WHETHER OF A TEMPORARY OR PERMANENT NATURE... • As per Para 12.1, THE Contractor shall be deemed to have satisfied himself as to the correctness and sufficiency of the Tender and of the rates and prices stated in the Bill of Quantities, all of which shall, except insofar as it is otherwise provided in the Contract, cover all his obligations under the contract (including those in respect of the supply of goods, materials, plant or services or of contingencies for which there is a provisional sum) and all matters and things necessary for the proper execution and completion of the Works. • As per para 37.3, "If, at the time......., the materials or Plant are not ready for inspection or testing ........,the Engineer determines that the materials of Plant are defective ..... • As per para 40.4, ' The contractor shall be paid at the Contract rates full amount for Works executed at site, and in addition, certain amount certified by th....
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....ing to supply materials other than consumables, vide the NMMC contracts. Since the contracts clearly require the applicant to supply materials and spares, in addition to consumable, it is seen that the applicant, in this ARA has not mentioned the complete facts of the matter which would clearly specify as to what is the correct proportion of services and actual quantity of materials to be used or supplied by the applicant. Hence keeping in mind the provisions of the two contracts mentioned above (since details of other contracts are not forthcoming), it is not difficult to come to a conclusion that the applicant has entered into a contract with the local bodies for both, supply of goods and also supply of materials and therefore there is no question of the same being considered as pure services sontracts. Notification No. 11/' 2017-Central Tax (Rate) dated 28th June, 2017 had notified levy of central tax, on the intra-State supply and as per Sr. No. 3, Heading 9954, (iii) of the said Notification, "construction services other than those mentioned at (i) and (ii)" of the said Sr. No. 3, Heading 9954 were leviable to tax @ 9%. This Notification was amended by Notification No. ....
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....ed in Notification No. 12/2017 vide Notification No. 2/2018-Central Tax which is reproduced as under:- Sl.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition 3A Chapter 99 Composite supply of goods and services in which the value of supply of goods constitutes not more than 25% of the value of the said composite supply provided to the Central Government, State Government or Union Territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution NIL NIL Here, it is seen that the type of services rendered by the applicant has been exempted with effect from 25.01.2018 subject to fulfilment of certain conditions, Exemption Notification No. 2/2018 Central Tax (Rate) dated 25.01.2018, provided the value of supply of goods does not exceed 25% of value of composite supply. Thus we see that with effect from 25.01.2018, the applicant can avail the benefit of the above said ....
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....se the Local bodies have refused to pay them the said GST. With respect to their query' regarding availability of input tax credit on purchases against such work order, Section 16 of the CGST Act, 2017, states that "Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person." (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,-- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (b) he has received the goods or services or both. Explanation. -For the purposes of this clause, it shall be detuned that the registered person has received the goods Where the goods are delivered by ....